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Price wars just got bigger: Idea-Vodafone merger to create a new mkt leader

Vodafone will own 45.1% of the merged entity after it transfers 4.9% to Idea promoters

Reuters 

Telecom firms signal muted response to spectrum sale

Britain's Vodafone Group will merge its Indian subsidiary with local rival Idea Cellular within two years, said on Monday, creating a new market leader better able to contest a brutal new price war.

will own 45.1 percent of the merged entity, after it transfers about 4.9 percent to promoters of and/or their affiliates for 38.74 billion rupees ($592.15 million) in cash, said.

The combined Vodafone-group would India's largest operation with almost 400 million customers, or 35 percent market share.

The merger comes after India's mobile industry was thrown into turmoil with the launch last year of Infocomm, the new 4G mobile broadband network built at a cost of more than $20 billion by India's richest businessman, Mukesh Ambani, as part of his Reliance Industries conglomerate.

Jio has made an impact with free voice calls and cut-price data services, forcing India's three biggest operators - Bharti Airtel , Vodafone and - to slash prices and accept lower profits.

said the expected cost and capex synergies of about $10 billion in net present value after integration costs and spectrum payments.

Idea will have the sole right to appoint the chairman, while will appoint the chief financial officer, it said.

The appointment of a chief executive officer and a chief operating officer would require the approval of both companies, which would get the right to nominate three board members each.

Vodafone, the world's second-largest cellphone operator, has endured a tumultuous ride since it entered India in 2007, with fierce competition and a high-profile tax battle making a business contributing more than 10 percent of its revenues and profits its most unpredictable by far.

Shares in rose as much as 14.25 percent immediately after the merger but gave up gains to be trading up 3.2 percent at 0432 GMT.

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Price wars just got bigger: Idea-Vodafone merger to create a new mkt leader

Vodafone will own 45.1% of the merged entity after it transfers 4.9% to Idea promoters

Vodafone will own 45.1% of the merged entity after it transfers 4.9% to Idea promoters

Britain's Vodafone Group will merge its Indian subsidiary with local rival Idea Cellular within two years, said on Monday, creating a new market leader better able to contest a brutal new price war.

will own 45.1 percent of the merged entity, after it transfers about 4.9 percent to promoters of and/or their affiliates for 38.74 billion rupees ($592.15 million) in cash, said.

The combined Vodafone-group would India's largest operation with almost 400 million customers, or 35 percent market share.

The merger comes after India's mobile industry was thrown into turmoil with the launch last year of Infocomm, the new 4G mobile broadband network built at a cost of more than $20 billion by India's richest businessman, Mukesh Ambani, as part of his Reliance Industries conglomerate.

Jio has made an impact with free voice calls and cut-price data services, forcing India's three biggest operators - Bharti Airtel , Vodafone and - to slash prices and accept lower profits.

said the expected cost and capex synergies of about $10 billion in net present value after integration costs and spectrum payments.

Idea will have the sole right to appoint the chairman, while will appoint the chief financial officer, it said.

The appointment of a chief executive officer and a chief operating officer would require the approval of both companies, which would get the right to nominate three board members each.

Vodafone, the world's second-largest cellphone operator, has endured a tumultuous ride since it entered India in 2007, with fierce competition and a high-profile tax battle making a business contributing more than 10 percent of its revenues and profits its most unpredictable by far.

Shares in rose as much as 14.25 percent immediately after the merger but gave up gains to be trading up 3.2 percent at 0432 GMT.

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Business Standard
177 22

Price wars just got bigger: Idea-Vodafone merger to create a new mkt leader

Vodafone will own 45.1% of the merged entity after it transfers 4.9% to Idea promoters

Britain's Vodafone Group will merge its Indian subsidiary with local rival Idea Cellular within two years, said on Monday, creating a new market leader better able to contest a brutal new price war.

will own 45.1 percent of the merged entity, after it transfers about 4.9 percent to promoters of and/or their affiliates for 38.74 billion rupees ($592.15 million) in cash, said.

The combined Vodafone-group would India's largest operation with almost 400 million customers, or 35 percent market share.

The merger comes after India's mobile industry was thrown into turmoil with the launch last year of Infocomm, the new 4G mobile broadband network built at a cost of more than $20 billion by India's richest businessman, Mukesh Ambani, as part of his Reliance Industries conglomerate.

Jio has made an impact with free voice calls and cut-price data services, forcing India's three biggest operators - Bharti Airtel , Vodafone and - to slash prices and accept lower profits.

said the expected cost and capex synergies of about $10 billion in net present value after integration costs and spectrum payments.

Idea will have the sole right to appoint the chairman, while will appoint the chief financial officer, it said.

The appointment of a chief executive officer and a chief operating officer would require the approval of both companies, which would get the right to nominate three board members each.

Vodafone, the world's second-largest cellphone operator, has endured a tumultuous ride since it entered India in 2007, with fierce competition and a high-profile tax battle making a business contributing more than 10 percent of its revenues and profits its most unpredictable by far.

Shares in rose as much as 14.25 percent immediately after the merger but gave up gains to be trading up 3.2 percent at 0432 GMT.

image
Business Standard
177 22